The Liberty Global/Vodafone deal will have far-reaching implications throughout Central and Eastern Europe.
They will of course be most keenly felt in the three markets – Romania, Hungary and the Czech Republic, in that order – directly affected by the proposed sale of UPC’s assets.
In Romania, Vodafone will suddenly find itself with what has hitherto been the missing piece in its jigsaw puzzle, namely a large and highly developed TV business. Vodafone’s transformation into a major player will almost certainly energise the market, and in particular the competition between the ‘big three’, which also include Digi (RCS&RDS) and Telekom Romania.
While the transaction is only expected to close in 12 months time, Orange has suddenly found itself under pressure to buy Akta, the country’s largest regional cable operator, in order to strengthen its own position in the market.
In Hungary, Vodafone earlier this year signalled its intention to start offering retail fixed-line services. This of course it will now be able to do once it gains control of Liberty’s assets in the country.
It will also automatically become one of the top three providers of electronic communications services in the country, going head-to-head with Magyar Telekom and Digi.
The latter has just strengthened its own position by securing regulatory approval for the acquisition of Invitel, the leading alternative telco, in a deal first announced in July last year.
Perhaps the most interesting thing about Vodafone’s proposed acquisition of Liberty’s assets in the Czech Republic is that the latter are currently integrated with those in Slovakia. The integration was only recently completed and will have to be unravelled.
While Vodafone will find itself the leading cable operator in the Czech Republic, it will also face growing competition from the investment group Kaprain, which through the acquisitions of Nej TV and Rio Media is now the second largest player.
Following the closure of the deal, Liberty will only have a regional presence in Poland and Slovakia. How long that will continue is at this stage anyone’s guess.